Patent Case Summaries | Week Ending August 2, 2019

A weekly summary of the precedential patent-related opinions issued by the Court of Appeals for the Federal Circuit and the opinions designated precedential or informative by the Patent Trial and Appeal Board.

The Federal Circuit affirmed the dismissal of Amgen’s complaint because prosecution history estoppel barred Amgen from succeeding on its infringement claim under the doctrine of equivalents.

Amgen’s asserted patent covers methods of purifying proteins using hydrophobic interaction chromatography. During prosecution, Amgen responded to the examiner’s rejections by asserting several arguments, including that the cited prior art reference did not disclose any salt combinations and also did not disclose “the particular combinations of salts recited in the pending claims.” After the patent issued, Amgen sued Coherus for infringement under the doctrine of equivalents (because the salt combination in Coherus’s process did not match any of the expressly claimed salt combinations in the patent). Coherus filed a motion to dismiss. The district court granted the motion, concluding that the prosecution history “shows a clear and unmistakable surrender of claim scope,” thus precluding Amgen from reasserting the surrendered scope under the doctrine of equivalents.

On appeal, Amgen argued that, during prosecution, it did not focus on the “particular combinations” argument, but rather distinguished the reference on other grounds, including that the reference failed to disclose any salt combinations at all. The Federal Circuit disagreed, explaining that “while Amgen did assert multiple reasons for why [the reference] is distinguishable, our precedent instructs that estoppel can attach to each argument.” Amgen also sought to avoid estoppel by arguing that its final response submitted during prosecution did not include the “particular combinations” argument. The Federal Circuit rejected this theory as well, explaining that this “does not mean … that Amgen’s prior statements are erased.” “Clear assertions made during prosecution in support of patentability, whether or not actually required to secure allowance of the claim, may also create an estoppel.” Thus, the Federal Circuit affirmed the district court’s ruling that argument-based prosecution history estoppel applied. “Amgen clearly and unmistakably surrendered salt combinations other than the particular combinations recited in the claims.”

The Federal Circuit affirmed the Patent Trial and Appeal Board’s final written decisions finding certain claims of two patents obvious. The Federal Circuit also held that “the retroactive application of IPR proceedings to pre-AIA patents is not an unconstitutional taking under the Fifth Amendment.”

Following a series of IPR petitions challenging the claims of two Celgene patents, the Board found certain claims unpatentable as obvious. The patents are generally directed to methods for safely distributing teratogenic or other potentially hazardous drugs while avoiding exposure to a fetus to avoid adverse side effects of the drug. On appeal, Celgene challenged the Board’s decisions as to claim construction, obviousness, secondary considerations, and motivation. The Federal Circuit analyzed and rejected each of Celgene’s challenges.

The Federal Circuit then turned to the constitutional issue of “whether the retroactive application of IPRs to pre-AIA patents is an unconstitutional taking.” The Takings Clause of the Fifth Amendment states that private property shall not “be taken for public use, without just compensation.” The Federal Circuit explained that Celgene’s pre-AIA patents were granted subject to existing judicial and administrative avenues for reconsidering their validity, including district court challenges, ex parte reexaminations, and (at the time) inter partes reexamination. The Federal Circuit noted that IPRs, which replaced inter partes reexamination, “are the most recent legislative modification to the PTO’s longstanding reconsideration procedures.” The court analyzed the differences and similarities between inter partes reexamination and IPRs, ultimately concluding that IPRs do not “differ from the pre-AIA review mechanisms significantly enough, substantively or procedurally, to effectuate a taking.”

The patent-in-suit describes a system and method for electronically processing paper checks. According to the patent, data from a check is captured at the point of purchase, the data is used to process a deposit to the merchant’s account, the paper checks are moved elsewhere for scanning and image capture, and the image of the check is mapped to a data file.

In analyzing subject matter eligibility, the Federal Circuit applied the two-step Alice framework. At step one, the Federal Circuit determined that the claims “are directed to the abstract idea of crediting a merchant’s account as early as possible while electronically processing a check.” The court explained that “the physicality of the paper checks being processed and transported is not by itself enough to exempt the claims from being directed to an abstract idea.”

At step two, the Federal Circuit disagreed with the district court that the claims contain an inventive step sufficient to transform the abstract idea into a patent-eligible application. Instead, the claims “simply instruct the practitioner to implement the abstract idea with routine, conventional activity.” The Federal Circuit further stated that “merely reciting an abstract idea by itself in a claim—even if the idea is novel and non-obvious—is not enough to save it from ineligibility.” The Federal Circuit also concluded that the claims failed the machine-or-transformation test. In its analysis, the court noted that while passing the test “can provide a ‘useful clue’ in the second step of Alice, passing the test alone is insufficient to overcome Solutran’s … failings under step two.” The Federal Circuit thus held that the claims are not directed to patent-eligible subject matter under § 101.

In 2010, VirnetX sued Apple in district court for infringement of several VirnetX patents. A jury found the asserted claims infringed and not invalid. As pertinent here, in a 2014 opinion, the Federal Circuit affirmed the finding of no invalidity and remanded as to other issues. Apple did not seek Supreme Court review. Meanwhile, in 2011 Apple had filed requests for inter partes reexamination as to two of the VirnetX patents. In 2016, the Patent Trial and Appeal Board found all claims of the two VirnetX patents unpatentable. VirnetX appealed to the Federal Circuit, arguing that the court’s 2014 opinion was a “final decision” on Apple’s attempt to prove invalidity, resulting in Apple being estopped from maintaining its reexaminations under the pre-AIA version of 35 U.S.C. § 317(b). VirnetX also challenged the merits of the Board’s conclusions.

Addressing these issues, the Federal Circuit explained that the pre-AIA version of § 317(b) requires the PTO to terminate a reexamination once there has been a final decision on the patent challenger’s invalidity case in federal court. Apple argued that because the Federal Circuit’s 2014 opinion remanded certain issues, Apple still has an avenue for future Supreme Court review of the no invalidity ruling. The Federal Circuit disagreed, holding that there is a “final decision” under § 317(b) once the time to file a certiorari petition has passed. The Federal Circuit further determined that the plain language of the statute and its purpose of protecting patent holders against duplicative litigation advise against Apple’s definition of a “final decision.” The court thus concluded: “In sum, § 317(b) applies here despite the fact that issues unrelated to invalidity were remanded.”

Turning to the merits of the Board’s decision, the Federal Circuit affirmed the unpatentability ruling as to all claims not subject to estoppel. The court rejected VirnetX’s “kitchen sink approach” of arguing that the Board’s decision incorrectly construed certain claims, shifted the burden to the patent owner to prove patentability, and lacked substantial evidence.

Judge Reyna concurred-in-part and dissented-in-part because, in his view, reexamination is not precluded. “Because Apple may still appeal [the Federal Circuit’s] affirmance of no invalidity, there is no ‘final judgment’ that triggers a bar under § 317(b).”

The Patent Trial and Appeal Board exercised its discretion under 35 U.S.C. § 314(a) to deny a petition for IPR.

In response to the IPR petition, the Patent Owner had criticized the petition for using the conjunction “and/or” to combine references in the asserted grounds of unpatentability, resulting in “thousands (if not millions) of obviousness combinations.” The Board agreed, determining that the petition raised voluminous and excessive grounds of unpatentability, thus failing to identify the grounds with particularity as required by § 312(a)(3).

In its analysis, the Board quoted the Supreme Court in SAS stating that whether to institute under § 314 requires the Board to make “a binary choice—either institute review or don’t.” The Board reiterated that “even when a petitioner demonstrates a reasonable likelihood [of success] as to at least one claim … institution of an IPR remains discretionary.” The Board also stated that “the statutory requirement for particularity in a petition for IPR takes on heightened importance when considered in conjunction with SAS’s ‘all-or-nothing’ approach.”

Because the Board’s post-SAS practice is to institute on all asserted grounds, “the Board may consider whether a lack of particularity as to one or more of the asserted grounds justifies denial of an entire petition.” Here, the Board found that the petition “suffers from a lack of particularity that results in voluminous and excessive grounds.” The Board ultimately determined that, “in the interests of efficient administration of the Office and integrity of the patent system and as a matter of procedural fairness to Patent Owner,” the entire petition should be denied under § 314(a).